Saturday, February 9, 2008

Its about the business - stupid

As a social business, you probably have at least two types of customer: people who buy your stuff and the people your business exists to help.

Chances are that you will also have a third type of customer – funders - to pay for the `helping’ side of what you do.

The competing demands of these customers can pull you in different directions like a medieval torture rack piling on the pressure until you submit – or snap!

But that’s social business: The people who buy your stuff, quite rightly, expect an A1 service.

Those whom you support also present a legitimate demand on your time and energy.

And your funders will want to be sure that you are delivering any `paid-for’ social outcomes.

This `triple whammy ‘is both the defining feature and potential Achilles heel of any social enterprise. How social entrepreneurs deal with this is the key to their eventual success.

So how do you do it? Two things stand out. One is keeping the business in balance.

Too many social enterprises I have encountered do `social’ at the expense of `business’. The result is a crap product.

Take `community cafes’ – a real social enterprise chestnut and, for me anyway, almost always a crap customer experience.

Last week, overcome by the need for a caramel macchiato, I passed by Café Nero and instead went round the corner to a brand new community café.

I wished I hadn’t bothered.

There was a ten minute wait while a hulking skinhead called `Hutchy’ (name changed), who had `KILL’ tattooed on each hand, struggled to make the coffee. There was no caramel for my drink and plastic seating which hurt my arse.

Never again.

Not that the place will probably exist for much longer - I was the only person in there.

This was a cafe dedicated to helping ex cons and drug addicts - which is great and I wish them well. If only they had thought a little more about the business…

The other aspect managing the Triple Whammy is being brutally honest.

With funders this means being up-front about what can be achieved in a start-up. Funders’ expectations are often utterly overwhelming.

They to want to see Hutchy off benefits, literate, numerate, housed, sober, straight, out of trouble and married with kids at the end of year one. All for about five grand, probably.

This is bollocks. The truth is that the sums involved often don’t even cover the costs to the business of taking on a person like Hutchy.

My guess is that Hutchy’s skills as a barista reflected the tiny amount of funding allocated to him by some Home Office formula, not any realistic appraisal of his needs.

Yet instead of saying all this, we smile nicely and engage in a dance of deceit in which we’ll say we’ll turn around people’s lives - and worry about the consequences later.

But this is a dangerous game, Accepting bum-deals like these can inflict mortal damage on fledgling social enterprises like this one.

For not only does the business end up absorbing extra costs while it is still running early operating losses.

On top of this, it is forced, for its funding, to employ too many people like Hutchy too early in the life of the business. When that community cafe closes down ( I give it a year), the salaried and suited quangocrats who funded it will, in my view, be partly to blame.

Managing the Triple Whammy also means having honest discussions with beneficiaries about is required of them, particularly in the early days of a business.

This would mean asking Hutchy to grow his hair a bit and to get his tattoos lasered before putting him front-of-house.

While this is not the type of conversation I personally would fancy having with him, it would, I am sure, have a positive effect on the café’s bottom line.

The big message here is that the business has to come first. If you’re a start-up, repeat this till it is etched into your brain!

In your early days, you should do whatever is necessary to survive, even if you achieve very little socially. Social enterprise is better played as a long game. Profit and life-changing stories don’t happen in year one.

That’s for later, when the business is properly established.

Sadly that drab community cafe will never cut it in the high street. How much better to have created a wonderful café that started with out no employees like Hutchy but was, in two or three years time, making money and using that money to offer first class opportunities to several guys in Hutchy’s position?

But isn’t this taking the `social’ out of social enterprise? No! Because, by waiting till the business can safely absorb people like Hutchy, you are creating the opportunity for him, and others like him, to benefit in perpetuity.

Happy customers, lives changed and if you’re really good, no need whatsoever for funders.

Now, that’s real social enterprise!

1 comment:

Tropical Health Chef said...

Good point. I am working on starting a similar venture, community cafe meets holistic healing center. This was very helpful to read.